- Global liquidity has surged ahead of a likely hike in U.S money supply
- Given the historical BTC pump amidst the liquidity surge, is another rally likely?
There’s an increasingly favorable macro set-up for Bitcoin [BTC], especially from a liquidity (money supply) perspective. In fact, according to Charles Edwards, Founder of crypto-hedge fund Capriole Investments, the overall global liquidity has exploded above a 4-year consolidation level now.
“Global money supply is exploding up. Plus, we just broke out of a massive 4-year consolidation. What do you think this means for Bitcoin?”
Source: Capriole Investments
While several factors could affect BTC’s prices, the world’s largest digital asset is a well-known liquidity junkie. Such a spike in global liquidity could set up BTC for an upside potential.
For context, the cycle highs in 2017 and 2021 coincided with an uptick in global liquidity, as noted by one market analyst – Francois Quinten.
“Global liquidity is about to spike up. So is #Bitcoin 💥”
Source: X/Quinten
U.S liquidity to fuel BTC prices
The recent surge in global liquidity isn’t surprising, given the beginning of quantitative easing as central banks cut interest rates. Canada and the U.K, among others, have reduced their interest rates too.
The U.S is expected to begin Fed rate cuts by September, which could further spike global liquidity and affect the cryptocurrency’s prices. At press time, interest rate traders were pricing a near 60%-40% Fed rate cut for 25 and 50 basis points, respectively.
Put differently, traders are now highly convinced of a September Fed rate cut.
Source: CME Fed Watch tool
Apart from the Fed rate cut, the U.S liquidity injection would come from the over $300 billion in T-bills (Treasury bills) the U.S Treasury Department will issue between now and the end of the year.
For the unfamiliar, T-bills are used by the government to raise funds to cover fiscal deficits needed for overall expenditure. In short, positive net issuance of T-bills will increase U.S liquidity.
According to BitMEX founder Arthur Hayes, this U.S liquidity setup would push BTC to $100k and break its sideways-downward trajectory.
“I expect that crypto will exit its sideways-to-downward trajectory starting in September”
In short, BTC could see massive price appreciation from September onwards.
Meanwhile, at the time of writing, the world’s largest cryptocurrency was trading at $60.8k, with BTC facing a short-term sell wall at $63k.
